Vietnam Banking Industry: Customer Satisfaction Analysis

It can be said that Vietnam is on the way of dramatic development and integration in global economic. Since Vietnam has officially become a member of the World Trade Organization (WTO), besides the advantages and opportunities, there have been still many challenges that Vietnam has to overcome. In recent years, Vietnamese’s banks have achieved many important achievements in innovation have grown larger and stronger than previous time. However, compared to the world, Vietnam banking industry is still small, modest, and inadequate.

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Undoubtedly, compared to 10 years ago, Vietnam banking industry has really been a remarkable growth. Firstly, banking system has mobilized and provided a large amount of capital to the economy, estimated about 16-18% of annual GDP (Vietnam Head Department Statistic 2008), nearly 50% of social capital. Credit growth has been increased during the year and in 2008 which was estimate to be approximate 24% that is 19% higher than in 2007. The banking system has also contributed to growth, the development, and economic stability in recent years. Secondly, Vietnam’s banking system had a comprehensive renovation. Many legal documents have been issued comprehensively, the policies about banking activities has been completed and consistent with international practice. Moreover, the discrimination between types of domestic credit institutions and the foreign ones has been gradually eliminated. Banks as well as credit institution have been autonomous and self-responsible. Competitiveness of credit institutions has been enhanced therefore banking market has been developing safely and effectively. Thirdly, monetary policies have been renovated and operating under market principles with international practice. The indirect operating tools that manage monetary policies have been formed and developed. Interest rate policy and exchange rate flexibility have been adopted by the market mechanism. Credit policies have been expanded and made innovation in the direction of fairness and equality for all economic sectors, business, and all residents.
1.2 Customer satisfaction management in Vietnam Banking Industry
Competitive trends in quality of banking product and services on financial and monetary markets increasingly urged Vietnamese’s banks to renew and continue to have effective customer policies and strategies in order to compete fairly with foreign banks. Thus, Vietnamese’s banks have ability to overcome the challenges that have been forecasted to be very fierce in coming time. Customer satisfaction management can be considered as an important point in cultural enterprise and cultural care, implementation of banks’ strategies towards customers in the context of globalization. Undoubtedly, currently when the difference in quality, design of banking services as well as the competitiveness of the products itself is no longer critical among banks, the determined factor is the quality of customer service. Aware of the important of increase customer satisfaction, Vietnamese’s banks have established customer satisfaction management in order to evaluate customer satisfaction on their products and services. Therefore, banks can improve their operations as well as consolidate their images in customers’ eyes, and banks can increase sales, market share, and position in the market.
2. Bank management studies on BIDV, Hochiminh City branch (HCMC)
2.1 Performance of BIDV, HCMC branch
Bank for Investment and Development of Vietnam has a short name is BIDV, was established under the Conference No.177/TTg dated on 26/04/1957 of Prime Minister of Socialist Republic of Vietnam. HCMC branch which is one of the largest scale branches in BIDV system, has estimated assets VND 10,000 billion (BIDV annual reports). HCMC branch has high business performance with ROA ratio always above 1%. There are 313 staffs classified into 4 blocks these are credit, customer services, block of units, and internal management. Founded in 1977, HCMC branch is always pioneer branch and dynamic in BIDV system in development new products and services based on applying modern technology and customer-oriented. Recently, BIDV – HCMC branch has been successful in the role of focal bank in arrangement of syndicated loans, co-financed investor in large scale projects. HCMC branch’s activities in recent years have been customer-oriented, creating the best conditions for customers to access and use banking services more effectively.
BIDV is one of four state-owned commercial banks so it is quite easy to understand why customers have high level of trust for bank. Based on the result of survey and research done recently to measure customer satisfaction, reveal that generally bank has been successful in bringing satisfaction to customers through the provision of products and services. The level of customer satisfaction varies from agree to fully agree. The measurement of customer satisfaction is based on the quality of services, number of products and services, and the continuity of using the services. The quality of services brings satisfaction to customers, they use the most services provide to them and they seem to be happier to use more BIDV’s services. This result confirms the criteria activities “cooperate and succeed” that BIDV has done for years. Thus, the bank has been successful in bringing satisfaction to customers through the provision of products and services. However, this is also pressure for the bank for better improvement what they have achieved. Therefore, the bank should promote further efforts to preserve and bring the highest satisfaction to customers.
2.2 Purpose of the study
Nowadays, in the competitive environment, customers are crucial survival of the bank. The banks which are paid attention, interest as well as loyalty of customers, will capture market shares and develop faster. Business strategic direction to customers is becoming the most important strategies of banks. How to give customers the best satisfaction is always the problem that banks try their best to fulfill. Therefore, research customer satisfaction in the bank is an important work that has to be done regularly and continuously in order to meet their needs. Since then, they can serve customers better and make customers always be satisfied when using bank’s products and services. This study is not out of this purpose which aims to enhance customer satisfactions for BIDV as well as increase the quality of products and services supplied by BIDV.
2.3 Significant of the study
The study presents the evaluation of customer satisfactions on products and services provided by BIDV – HCMC branch. Thus, bank has a comprehensive glance on the products and services they are supplying to customers. Bank should focuses on business development strategies as well as the quality of products and services. Obviously, if the service quality does not meet customer’s demand, the customers will no longer to use it. From the evaluation of customer satisfactions, bank can realize clearly their strengths and weaknesses. From there, they continue to promote strengths and overcome weaknesses in order to improve the quality of services, increase customer satisfaction.
2.4 Limitation of the study
The study has a positive contribution to the bank in understanding customers and identifying their position in the market, however the study still has some certain limitations as follows:
The study focuses on group business customers therefore it cannot be the overview of the entire customers’ transactions in BIDV – HCMC branch.
The study only considers about the time used and the number of bank’s transactions, it does not find out all customer satisfaction in the connection with trading enterprises, financial potential and cultural factors.
The study only focuses on evaluation of customer satisfaction of HCMC branch’s services so it cannot assess on customers in the city and other locations as well as potential customers who are not using banking services.
Based on these findings, this study can be improved with variety customer group, larger number of samples, wider research scale.
3. Model relevant to study
3.1 Introduction of Servqual model
Managers in banking industry are under increasing pressure to demonstrate that their services are customer – focused and that continuous performance improvement is being delivered. Given the financial and resources constrains under which banks must manage it is essential that customer satisfaction are properly met and measured and that from the customer satisfactions, any gaps in services quality are indentified. This information the assists a manager in identified cost – effective ways of closing services quality gaps and of prioritizing which gaps to focus on – a critical decision given scare resources.
This study involves the use of Servqual model (Parasuraman, 1988) which is a popular model of quality research of services and the most common application in the marketing research. According to Parasuraman, the quality of services cannot be determined vaguely but it depends on sense of belonging to customers for such services and this perception is considered by many factors. Servqual model is built based on the evaluation of quality of services, which is the comparison between the expected value, expectation, and the value customers perceived. Servqual model considers two main aspects of services quality as a result services and the process of services which are studied through 5 criteria – reliability, responsiveness, tangibles, assurance, and the empathy.
Figure 3.1 SERVQUAL MODEL
Reliability
Responsiveness
Customer satisfaction
Services quality
Tangibles
Assurance
Sympathy
Sources: International Journal of Business and Management
3.2 Elements of Servqual Model
3.2.1 Reliability
Reliability shows the ability to provide services accurately, on time, and credibly. This requires consistency in the implementation of services and respects commitments as well as keeps promises to customers. In the banking sector, this criterion is measured by customers through the following elements.

The bank performs the services right from the first time.
Banking services are implemented at the time they promise.
Banking transactions are done correctly.
Bank’s staffs are always ready to serve customers.
There are always bank’s counselors at the table to help the customers.
Bank’s statements are submitted regularly and promptly.

3.2.2 Responsiveness
This criterion measures the ability to solve the problem fast, deal with customers’ complaint effectively and the willing to help customers as well as meet the customers’ requirements. In other words, responsiveness is the feedback from banks to what customers want.

Bank’s staffs are available to assist customers.
Bank provides services rapid, on time.
Bank responses positively to customers’ requirements.
Bank’s hotline for customer services is 24/24.
Bank tries to solve problems for customers.

3.2.3 Tangibles
Tangibles are the images of the facilities, equipment, machines, attitude of staffs, materials, manuals, and information systems of the bank. General speaking, anything that customers can see by eyes and feel by senses can impact on tangible.
The bank has adequate facilities.
Bank has modern equipment and machinery.
Bank’s staffs look professional and dressed.
Bank arranges the transaction counters, tables, and shelves scientifically and conveniently for customers.
3.2.4 Assurance
This element creates credibility and trust for customers, which is considered through professional services, excellent technical knowledge, attitude courtesy, and good communication skills, so that customers can believe in the quality of bank’s services.
Bank’s staffs serve customers politely, and courteously.
Transaction documents are clear and understandable.
Bank’s staffs always provide necessary services information for customers.
Bank’s staffs answer customers’ questions clearly and accurately.
3.2.5. Sympathy
Sympathy is the caring, consideration, and the best preparation for customers, so that they can feel as “guests” of the bank and are always welcome at any times, anywhere. Human factors are the core of this success and the more caring the bank gives to customers, the more customer understanding increases. The sympathy of bank’s staffs for their customers are expressed as follows:
Bank’s staffs notices the needs of each customer.
Customers do not have to queue for a long time to be served.
The bank has convenience location for customers to have transactions.
Bank’s ATM systems are modern and ease to use.
Bank’s staffs treat customers kindly.
3.3 Summary and limitation of previous research and findings
Through journals I have examined, research issues about customer satisfaction can be classified into 3 main categories including factors influence on customer satisfaction, the measurement of customer satisfaction, and the impact of customer satisfaction on business
3.3.1 Research about factors influence on customer satisfaction
The research investigates the relationship between services quality, overall customer satisfaction, and behavioral intention across public and banks. The findings indicate that services quality is significant determinant of customer satisfaction in banking industry (Monica Bedi, 2010; M.Jun and S.Cai, 2010). However, different dimensions of services quality were found to be statistical significant across public and banks. The study helps banks to redefine their corporate image to one that is customer-oriented and driven by service quality.
Research limitation concern the potential for the data inaccuracies due to item misinterpretation or predisposition to certain responses on the part of the participant does exist (Bedi, 2010). Similarly, the sampled data is one limitation which was collected from one organization (M.Jun and S.Cai 2010). Although, the purchasing department serves a wide range of internal customers and is involved in various purchasing activities, the dataset is limited by the potential lack of generalisability.
3.3.2 Research about the measurement of customer satisfaction
The research provides method to measure customer satisfaction based on assessing customer perception of services quality in services and retailing organization. One of the most popular model is Servqual (Parasuraman, 1988) is based on the perception gap between the received quality and the expected services quality, and has been adopted for explaining consumer perception of services quality. In addition, the availability of customer satisfaction data from national indices has also facilitated the examination of the factors associated with aggregate level customer satisfaction (M.Ogikubo et al, 2009).
Besides, the research points out the limitation of the Servqual is that the evaluation of services quality evaluated based on the expectation performance gap derived from Parasuraman 1988 is insufficient because much of the empirical research supported performance based measures of services quality (K.Ravichandran, 2010).
3.3.3 Research about the impact of customer satisfaction on business
The research presents that customer satisfaction has an important impact on business which is determined factor in customer loyalty as well as customer retention (Harkiranpal S., 2006). Moreover, the research provides an examination of satisfaction-retention relationship, and the development of more comprehensive view of the customer’s quality perception (Hennig Thurau and Klee, 1997). Customer satisfaction positively affects an organization’s profitability. Satisfied customers form the foundation of any successful business as customer satisfaction leads to repeat purchase, brand loyalty as well as positive word of mouth (Hoyer and MacInnis, 2001).
4. Methodology for study
4.1 Research design
These terms quantitative and qualitative are used widely to differentiate both data collection techniques and data analysis procedures. Quantitative is predominantly used as a synonym for any data collection techniques or data analysis procedures that generates or uses numerical data. In contrast, qualitative is used predominantly as a synonym for any data collection techniques or data analysis procedures that generates or uses non numerical data.
Three types of quantitative studies these include experimental approach, cross-sectional designs, and survey method. Because of limited time to complete collecting primary data, survey is an optimal method to collect research information. When using survey will give more control over the research process and sampling is used it is possible to generate findings that are representative of the whole population at a lower cost than collecting the data for the whole population.
4.2 Data collection
Data can be obtained from primary or secondary sources. Data can be collected in a variety of ways, in different settings and from different sources. Data collection methods include interviews, questionnaires, observation, and variety of other motivational techniques. Questionnaire is the best way to collect the data about customer satisfaction because making an appointment for personal interviews or telephone interviews is difficult, even though impossible. Beside the personal information and customer characteristic (open questions), questionnaire is designed including 33 properties (closed questions) that build up the characteristic of banking services. It is presented on scale from 1 to 7 points (from lowest satisfaction to highest satisfaction about the components of banking service). It will help quantify the opinion of customers who were invested and use the questionnaire to verify and analyze the multivariable date in the valuable the satisfaction of customers later. The customers are also suggested to evaluate their own overall satisfaction in last question by giving the scores.
4.3 Data analysis
After collecting all the data, the process of analysis begins. To summarize and rearrange the data, several interrelated procedure are performed during the data analysis stage. For quantitative data analysis, statistical tools of Microsoft excel and analytical software SPSS are used for data input and analysis. The statistic results were presented by graphical form with detail description.
5. Conclusion
Customer satisfaction is not only vital factor but also the target that all banks want to achieve. Along with the increasingly strong competitiveness in banking industry, learning about customer needs as well as the factors affecting customer satisfaction has become essential. Therefore, this study is useful in proposed policies, development strategies of banks.
In the service sector in general and banking sector in particular, the role of the meeting customer needs has an important implication that derives from the interaction between banks and customers as well as the positive impact that banks have. More specifically, if banks bring their customers the high customer satisfaction, customers will continue to use their services, support new bank’s products or services, introduce the bank to other partners, and become loyal customers. From there, they are contributing to increase sales, market share, and position in the market that are the targets any bank wants to achieve.
This study researches customer satisfaction with the products and services that banks provide to customers. This thesis is presented through the survey of customer satisfaction. Survey results are reliable input source to marketing strategies and opportunities to help banks better understand customer needs, customer’s evaluation of quality of bank’s services. Therefore, banks can improve their operations and enhance customer satisfaction more effectively.